Now that the government’s furlough scheme is coming to an end and companies are trying to get their workers back into employment, we’re hearing a lot of stories about businesses asking their staff to work for a reduced wage. It obviously never feels good to do the same work for less pay, and you may question whether it’s even legal. This is where things start to get complicated.
Businesses are definitely allowed to ask their employees to take a reduced salary, however in most cases they will need to get your agreement: they can’t simply make the decision to cut your earnings.
Unfortunately, this doesn’t mean that you can just say no and expect things to carry on as before. If your employer can demonstrate that the request is reasonable – perhaps because they have recently faced losses due to the pandemic – then they would be within their rights to threaten to dismiss you if you don’t accept the new pay.
In most cases they won’t want to do this, so there should be some room for negotiation. Some options to consider could be offering to work reduced hours so that your hourly rate stays the same despite your actual earnings decreasing. This may not be possible, and they’re not obligated to agree to your request, but it’s worth opening the conversation.
You should also consider the long-term consequences of refusing to take a pay cut. If you believe that your employer genuinely can’t afford to pay you at your previous rate, then it’s worth considering whether agreeing to a reduced salary could help you to avoid redundancy in the longer term. Of course, this is all down to your personal financial circumstances: if you’re not able to meet your living costs with the new proposed salary then it might not be an option.
I’ve agreed to a pay cut – now what?
Once you’ve agreed, your boss will probably ask you to sign a new contract making things official. This is your last chance to reconsider, so make sure you’ve thought through all the options before signing. If you’ve asked for terms such as reduced hours or a return to your previous rate of pay after a certain period of time, make sure that this is included in the contract.
If you’re unhappy with your new working arrangements, then it’s time to dust off the CV and start applying for new roles. Although the job market is difficult at the moment, there’s still work out there, particularly if you’re willing to be creative about your role. Those who have managed to negotiate reduced hours could consider using the time to build skills through online courses.
Depending on how much your household now earns, you may also be entitled to additional support from the government. Go to the gov.uk benefits calculator and plug in your numbers to find out whether you could get Universal Credit or help with your rent.
I don’t think I’m being treated fairly
Your boss doesn’t need to treat every department the same – they’re not obliged to ask everyone to take the same reduction in pay. However within one team, everybody should be treated fairly. You’re within your rights to find out whether others with the same role and pay grade are being asked to make the same sacrifice.
If you feel that yo’’ve been singled out due to a protected characteristic such as your age or gender, then be sure to raise it. There is information available from the government about how to make a claim if the discrimination continues.